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Whole Foods illustrates the challenge of late-stage CRM integration

Evan Schuman | June 19, 2017
What happens when a US$16 billion, 37-year-old chain wants to tackle CRM for the first time? Whole Foods is about to find out.

trolley square Whole Foods
Credit: Whole Foods via

At best, a properly integrated CRM program is complex, given the huge number of systems it touches, or at least should touch. But what happens when a $16 billion, 37-year-old chain wants to tackle CRM for the first time? Whole Foods is about to find out.

Whole Foods is hardly the only Fortune 500 retailer to have resisted CRM and loyalty programs. The biggest example would be Walmart. But Walmart and Whole Foods have resisted CRM for radically different reasons.

With Walmart, the reasons are price perception and price reality. The price reality is the incremental additional cost that CRM would add to operations, ultimately making it ever-so-slightly more difficult for Walmart to offer the lowest possible prices. But price perception is the bigger issue. If shoppers are told that loyalty cards bring lower prices, doesn't that signal that customers aren't already getting the lowest prices?

Whole Foods' reason for resisting CRM is privacy perception. Whole Foods embraces customer service as a differentiator in full-service grocery, much as does Trader Joe's in limited grocery and Nordstrom in apparel. And Whole Foods execs worried that a program that so obviously tracks customers closely might be off-putting.

But in 2017, with mobile tracking every shopper far more closely than any CRM system could, the concern may be moot. Put another way, if shoppers believe that privacy is already lost, they might at least get the discount.

This gets us into the IT mud. When a 37-year-old retail chain wants to suddenly embrace a loyalty program, should it leverage all of its existing data - scattered among various systems, such as basket analysis and item purchase histories and scant web and mobile customer activity -- to get things started -- or should it start anew so that the data is far more consistent?

Whole Foods is working with a vendor called Dunnhumby on category management, which will play a critical role in the chain's CRM and loyalty efforts. According to David Ciancio, the company's senior customer strategist, "What is shifting is that data can be used in a benign way to create value for shoppers." What today's customers think, he said, is "I know you have my data. You better do something that is good for me."

But first, there are the technology obstacles. "The real barriers are POS systems in general" and "the number of different POS systems within each retailer," Ciancio said. Whether those different point-of-sale systems are there because of acquisitions or because the company is slowly rolling out a new version - or a new POS system entirely - across the chain makes little difference. At any one point, most chains simply do not have one consistent POS version across every store.


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